The Long and Short of Discounting Yourself

One of the most difficult parts when starting out in the design business is how much you should be charging for your services and if you should be offering, or accepting, discounted work. This is a much discussed topic on which there are an enormous number of varying opinions, formulas and techniques, the long and the short of which is, whatever you charge, it’s your day job and it needs to make you a living.

You need to decide how much you need to earn

Before deciding on hourly or fixed rates, you need to decide how much you need to earn annually, you need to take many things into consideration before you can determine your profit cut, for example, buro overheads, hardware and software costs together with any necessary updates and deterioration losses, expenses for advertising and promoting your business, not forgetting to include the costs of your private life such as the costs of your place of dwelling, and general living expenses for you and your family.

Once you have all of this information you can calculate how much you need to earn on an hourly basis and how many days of the week you need to work to achieve this. This in turn allows you to calculate a minimum price for an estimated amount of work, anything that you charge on top of this minimum is going to pay for those little, or big, extras in life.

How Much On Top

A commonly used business strategy when deciding on the correct hourly rate is to charge the client what you think he’s willing to pay, but this can tend to fall apart if you’re unexperienced and in the worst case, lose you the job.

Another way to determine a rate, is to do a little research to find out what other designers are charging, and getting paid, and work out a comparable pricing strategy. This is not only good for yourself but also good for the industry in which a worrying amount of undercut or even free work is in circulation.

Your rates can vary depending on many factors such as how long you’ve been in the business and how much experience you have, to how specialist the job is and how much competition exists in the area. Although, through the Internet, the area in which you live is becoming less and less important, there are still many clients who simply prefer to have face to face contact with someone from their local area.

Prices I’ve found range between 25 per hour offered by various freelancers, 52 recommended hourly rate recommended by certain unions and up to 200 for high in demand designers, but this is a very loose look around, you need to do your research in the area in which you live.

Cheap, Cheaper Cheapest

Should you take on work from clients who want discounted work? Let me ask you a couple of simple questions. Is the bank going to reduce your payments as a favor? Is the supermarket going to give you a discount for a smile or friendly word? Do you owe this potential client a living?

Giving discounted prices is reducing your incoming, which is based on the calculation that you did earlier. If you say yes to cheap, you’re actually giving this part for free, why? Once you start undercutting yourself you’ll eventually earn the reputation of being cheap and this will come nicely packed with the reputation of, not quite incompetent, but being of less value than the designer who charges more. This isn’t a good concept for business.

Discounted prices also attract discount clients together with potential trouble, and worse, cheap clients tend to recommend other cheap clients with the recommendation that you’re cheap. In the end, even if you stood by a cheap client as he grew, keeping prices low to enable him to afford to expand his business and become successful, he’s not going to want your cheap prices once he can afford to pay more, and worse still, when he asks you for a quote for that expensive job and you estimate it with the correct hourly rate you’re not going to get the work – because you’re cheap, and cheap doesn’t equal the quality that he can now afford.

What if You Need the Job

If someone asks to do a cheap job, and you really need the work, then make a deal. They can’t afford to pay, or maybe don’t want to afford, the full price, therefore make them an offer for a reduced amount of work which, in turn reduces the price. This ensures that you still get paid your hourly rate, and they get to pay the price they can afford. No sympathies, just business.

So…

There are many going rates that can be considered acceptable for all, from newbies to top designers . If your jumping into the industry then slip on your respectable suit, learn when to say yes and no, and do it in style. You’ll thank yourself later.